Global compliance system

ABSTRACT

A system for implementing a compliance program in a financial institution is provided and includes a list database for storing material information regarding a plurality of entities that is known to said financial institution. Also included is a list manager that receives a compliance query from an affiliate of the financial institution having a status. The list manager provides a compliance response to the affiliate based on the plurality of entities and according to the status of the affiliate.

CROSS-REFERENCE TO RELATED APPLICATION

This application is a continuation of U.S. patent application Ser. No.10/090,285, filed on Mar. 4, 2002, which claims the benefit of thefiling date of U.S. Provisional Application No. 60/289,975 entitled“Global Compliance System” which was filed on May 10, 2001, the entirecontents of which are incorporated by reference in their entirety.

BACKGROUND

The following invention relates to compliance systems and, inparticular, to a system for implementing a compliance program in ageographically-dispersed financial institution. United States securitieslaws and the laws of other nations make it unlawful, in somecircumstances, for a person who possesses non-public, materialinformation about an issuer (“inside information”) of publicly tradedsecurities to trade in the securities without disclosing the informationto the counterparty, or to “tip” others to the information. Brokerdealers that engage in investment banking including both publicunderwriting and financial advice to public companies in mergers andacquisitions transactions often receive inside information. As a resultthey would be disabled from proprietary trading, including marketmaking, publishing research, giving investment recommendations andmanaging money unless there were an effective way to prevent thoseengaged in those activities from learning about the inside information,as well as legal recognition of such policies and procedures to preventattribution of the inside information to the broker dealer's traders,research analysts, portfolio manager and sales personnel even in theabsence of such actual knowledge.

The enactment of the Insider Trading and Securities Fraud EnforcementAct (“ITSFEA”) in 1988 strengthened the Securities and ExchangeCommission's (“SEC”) enforcement powers over insider trading and createdan explicit duty for U.S. brokers dealers to establish, maintain andenforce procedures designed to control the flow on inside information.Neither the SEC nor the self regulatory organization's have promulgatedregulations specifying the policies and procedures that will be deemedadequate in connection with the misuse of inside information. However,the SEC has identified several “minimum elements” necessary for theestablishment of adequate procedures. Specifically, broker dealers must,among others things, (i) review customer, employee and proprietarytrading through effective maintenance of some combination of watch andrestricted lists, (ii) maintain a substantial Compliance Departmentcontrol over relevant interdepartmental communications, and (iii)conduct heightened reviews when a firm possesses inside information.

In implementing the required policies and procedures broker dealerstypically maintain a list, sometimes called a Grey List or Watch List,that includes all companies about which employees of the financialinstitution (for example, bankers) have knowledge of material non-publicinformation. New companies are added to the Grey List when financialinstitution employees become privy to material non-public informationregarding such companies. In order to add a company to the Grey List, abanker typically calls a compliance officer of the financial institutionindicating that the broker dealer has, or is likely to possess insideinformation regarding a particular company. The Compliance Departmentgathers the relevant information and places the company on the Grey Listin which case the employees that are involved in advising the companyare restricted from trading in the stock of the company. Furthermore,the broker dealer monitors the transactions of its employees andproprietary traders in the given company in order to detect potentialmisuse of the information.

In certain cases, when a financial institution's professionalinvolvement with a company is made public, trading restrictions areimposed. For example, if the financial institution is advising Company Ain its attempt to acquire Company B and the information has been madepublic, employees generally are restricted from trading the stock ofCompany A and Company B as well as engaging in any other investment oradvisory activities that creates an appearance of impropriety. Inaddition, restrictions on proprietary trading and customer solicitationalso may be imposed.

The prior art processes for managing the compliance obligations offinancial institutions typically include a compliance officer of theinstitution that receiving from the institution's bankers informationregarding the bankers' advising activities with respect to particularcompanies. Based on the nature of these activities and the status of anytransactions contemplated by the bankers' clients, the complianceofficer then places the particular companies on the Grey List, theRestricted List or no list altogether. If a particular company is placedon either the Grey List or Restricted List, then the compliance officeralso includes details of the contemplated transaction such as expectedtiming of the deal, the composition of the deal team, the details of thetransaction, etc.

Certain employees of many broker dealers are required by firm policy topre-clear personal securities transactions. The employee must interactwith the compliance officer to determine whether the trade includes acompany on either the Grey List or Restricted List. If the tradeincludes a company on the Restricted List, then the compliance officerindicates to the employee that the employee is prohibited from makingthe contemplated trade. If the trade includes a company on the GreyList, then the compliance officer will generally not prohibit the tradeunless the inquiring employee is directly involved in advising thecompany and therefore would be in the position of knowing materialnon-public information regarding the company.

In addition to pre-clearing trades, the prior art compliance processesalso include monitoring the trading activity of employees throughout theinstitution for each company on the Grey List. If the compliance officernotices an increase in trading activity in any of the companies on theGrey List, then the compliance officer may initiate an investigation todetermine whether the trading activity is a result of improper use ofany material non-public information.

The prior art processes used by financial institutions for monitoringtrading activities for compliance with insider trader regulations havenumerous shortcomings. First, the process of pre-clearing a tradetypically requires the compliance officer to individually review eachtrade request received from employees to determine if any of theunderlying companies are on the Grey List or Restricted List. This is amanually intensive and slow process resulting in two problems forfinancial institutions. First, this requires that financial institutionsallocate scarce and precious compliance resources to a purelyministerial function, precluding the opportunity to apply thoseresources against higher level compliance services. Second, employeesdesiring to execute trades may not receive clearance in time to executethe trade at a favorable price. This problem is further exacerbated infast-paced financial markets when waiting for a compliance officer toapprove a trade is unacceptable. Maintaining a compliance program inglobally dispersed financial institutions is even more problematicbecause of the difficulty in providing employees a trade pre-clearancethat may depend on updates to the Grey List and/or Restricted List thatoriginates several time zones away. The inability of the prior artcompliance processes to efficiently manage the Grey List and RestrictedList in a global context may result, for example, in a Japanese employeeexecuting a trade in the stock of a particular company that a NewYork-based banker is advising because the Restricted List has not yetbeen updated by the New York compliance officer who may not be availableto otherwise pre-clear the trade during Japanese trading hours. Becausethe prior art compliance processes are inefficient and often ineffectiveat spotting Grey List and Restricted List trading violations, afinancial institution may be subject to substantial fines for itsinability to monitor and prevent trades that violate insider tradingregulations.

Accordingly, it is desirable to provide a system for implementing acompliance program in a geographically-dispersed financial institution.

SUMMARY OF THE INVENTION

The present invention is directed to overcoming the drawbacks of theprior art. Under the present invention a system for implementing acompliance program in a financial institution is provided and includes alist database for storing material information regarding a plurality ofentities that is known to said financial institution. Also included is alist manager that receives a compliance query from an affiliate of thefinancial institution having a status. The list manager provides acompliance response to the affiliate based on the plurality of entitiesand according to the status of the affiliate.

According to an exemplary embodiment, the material information regardingthe plurality of entities is partitioned into a Grey List and aRestricted List.

According to another exemplary embodiment, the affiliate is an employee,the compliance query is a request by the employee to trade a security ofan entity and the compliance response is a denial of the request totrade if the entity is included in the partition of the plurality ofentities included in the Restricted List.

According to yet another exemplary embodiment, the affiliate is atrader, the compliance request is a request to trade a security of anentity and the compliance response includes at least one of theplurality of entities included in the Restricted List and a clearancecode.

In still yet another exemplary embodiment, associated with the at leastone of the plurality of entities is a transaction type and the requestto trade has an activity type and wherein the clearance code denies therequest to trade based on the transaction type and the activity type.

In an exemplary embodiment, the transaction type is selected from agroup including mergers and acquisitions, initial public offerings andtender offers.

In another exemplary embodiment, the activity type is selected from agroup including principal activity, market making activity, positionaltrading activity and derivative trading activity.

In yet another exemplary embodiment, the affiliate is a supervisoryanalyst, the compliance request is a request to issue a report regardingan entity and the compliance response includes at least one of theplurality of entities included in a combination of the Restricted Listand the Grey List.

In still yet another exemplary embodiment, the compliance responseincludes at least one safe harbor provision that grants at least aportion of the compliance request.

In an exemplary embodiment, the grant of the portion of the compliancerequest is based on geography.

In another exemplary embodiment, the affiliate is a compliance officer,the compliance request is a request to view at least a portion of acombination of the Restricted List and the Grey list and the complianceresponse includes the portion of the combination of the Restricted Listand the Grey List.

In yet another exemplary embodiment, the compliance response includesfor at least one of the plurality of entities included in the portion aclearance code and a transaction type.

In still yet another exemplary embodiment, the compliance responseincludes for at least one of the plurality of entities included in theportion a safe harbor provision.

In an exemplary embodiment, a surveillance system is included thatreceives the plurality of entities stored in the list database formonitoring trading activity in accordance with the compliance program.

In another exemplary embodiment, the list database receives theplurality of entities from a compliance officer in communications withthe system.

In yet another exemplary embodiment, the list database receives at leasta portion of the plurality of entities from a transaction informationsource.

In still yet another exemplary embodiment, the list database receivespositional information relating to the financial institution and thecompliance response is based on the positional information.

In an exemplary embodiment, the list database receives affiliatedirectorship information and the compliance response is based on theaffiliate directorship information.

Under the present invention, a method for implementing a complianceprogram in a financial institution is provided and includes the step ofstoring a plurality of entities in which the financial institution isassociated with each of said plurality of entities. Next, a compliancequery is received from an affiliate of the financial institution havinga status. Finally, a compliance response is provided to the affiliatebased on the plurality of entities and according to the status of theaffiliate.

In an exemplary embodiment, the plurality of entities is partitionedinto a Grey List and a Restricted List.

In another exemplary embodiment, trading activity is monitored inaccordance with the compliance program based on the plurality ofentities stored.

In yet another exemplary embodiment, the plurality of entities isreceived from a compliance officer.

In still yet another exemplary embodiment, at least a portion of saidplurality of entities is received from a from a transaction informationsource.

In an exemplary embodiment, positional information relating to saidfinancial institution is received and the compliance response based onthe positional information is provided.

In another exemplary embodiment, affiliate directorship information isreceived and the compliance response based on the affiliate directorshipinformation is provided.

Under the present invention, a system is provided for monitoring tradingactivity of a trading system operated by a financial institution inaccordance with a compliance program wherein the trading system receivesa trade request to trade a security of an entity. The system includes alist database for storing a plurality of entities wherein the financialinstitution is associated with each of the plurality of entities. Thetrading system receives the plurality of entities from the list databaseand allows the trade request if the entity is not included in any of theplurality of entities.

Under the present invention, a method for monitoring trading activity ofa trading system operated by a financial institution in accordance witha compliance program is provided and includes the step of storing aplurality of entities wherein the financial institution is associatedwith each of the plurality of entities. Next, a trade request to trade asecurity of an entity is received. Next, it is determined whether theentity is included in the plurality of entities. Finally, the traderequest is allowed if the entity is not included in the plurality ofentities.

Accordingly, a method and system is provided for implementing acompliance program in a geographically-dispersed financial institution.

The invention accordingly comprises the features of construction,combination of elements and arrangement of parts that will beexemplified in the following detailed disclosure, and the scope of theinvention will be indicated in the claims. Other features and advantagesof the invention will be apparent from the description, the drawings andthe claims.

DESCRIPTION OF THE DRAWINGS

For a filler understanding of the invention, reference is made to thefollowing description taken in conjunction with the accompanyingdrawings, in which:

FIG. 1 is a block diagram of a global compliance system of the presentinvention;

FIG. 2 is a screenshot of an add transaction screen included in thecompliance system of FIG. 1;

FIG. 3 is a screenshot of an add issuer detail screen included in thecompliance system of FIG. 1;

FIG. 4 is a screenshot of an add deal team detail screen included in thecompliance system of FIG. 1;

FIG. 5 is a screenshot of a Grey List issuer detail screen included inthe compliance system of FIG. 1;

FIG. 6 is a screenshot of a search transactions screen included in thecompliance system of FIG. 1;

FIG. 7 is a screenshot of a query results screen included in thecompliance system of FIG. 1;

FIG. 8 is a screenshot of a general view screen included in thecompliance system of FIG. 1;

FIG. 9 is a screenshot of a transaction comment screen included in thecompliance system of FIG. 1;

FIG. 10 is a screenshot of a deal team screen included in the compliancesystem of FIG. 1;

FIG. 11 is a screenshot of a trader query response screen included inthe compliance system of FIG. 1;

FIG. 12 is a screenshot of a supervisory analyst search transactionsscreen included in the compliance system of FIG. 1;

FIG. 13 is a screenshot of a supervisory analyst query response screenincluded in the compliance system of FIG. 1;

FIG. 14 is a screenshot of a private bank result screen included in thecompliance system of FIG. 1;

FIG. 15 is a block diagram of a global compliance system according to anexemplary embodiment of the present invention;

FIG. 16 is a block diagram of a global compliance system according toanother exemplary embodiment of the present invention; and

FIG. 17 is a block diagram of a global compliance system according toyet another exemplary embodiment of the present invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENTS

Referring now to FIG. 1, there is shown a block diagram of a globalcompliance system 101 of the present invention. System 101 is typicallyoperated by a financial institution that receives material informationregarding their clients and therefore must take steps to prevent itsemployees, traders and analysts from engaging in activities pertainingto those clients while the material information is not publicly known.In an exemplary embodiment, the material information may also include,by way of non-limiting example, employee registration status, humanresources information and any other information that may be relevant toperforming a compliance function. According to an exemplary embodiment,system 101 is a computer system that executes software that performs thefunctions to be described below.

At the heart of system 101 is a list database 103 that contains aplurality of entities about which any of the employees (for example,bankers) of the financial institution has material non-publicinformation. The entities contained in list database 103 are partitionedinto a plurality of files including at least a restricted list file 105that includes those entities that are on the financial institution'sRestricted List and a Grey list file 107 that includes those entitiesthat are on the financial institution's Grey List. List database 103also includes a deal team file 109 that includes for each entityincluded in either restricted list file 105 or Grey list file 107 anyemployees of the financial institution that are a member of a team thatis in possession of material non-public information pertaining to theentity.

In an exemplary embodiment, restricted list file 105, Grey list file 107and deal team file 109 included in list database 103 are populated by acompliance officer that is affiliated with the financial institution formaintaining the financial institution's Restricted List and Grey List.To populate list database 103, the compliance officer uses a complianceofficer (CO) access device 111 (for example, a personal computer) tocommunicate with system 101 using any known communications method andprotocol, such as the Internet. CO access device 111 interfaces with auser interface 119 that provides the compliance officer with the variousdata entry screens to enter and maintain the Restricted List and GreyList, as will be described below. System 101 also includes a listmanager that receives the compliance officer's data entry and requestsfrom user interface 119 and either retrieves the requested informationfrom or causes information to be stored in list database 103, asappropriate.

Typically, the compliance officer receives from employees in thefinancial institution, such as bankers, the names of entities for whichthe employees have a relationship and therefore may be in possession ofmaterial non-public information. Generally, a banker may receive suchmaterial non-public information in the context of advising the entitywith respect to a transaction, such as a merger or an initial publicoffering. The compliance officers determine whether any particularentity forwarded by a banker should be added to the financialinstitution's Grey List or Restricted List or other lists that may bemaintained. If the compliance officer determines that a particularentity should be included in one of the lists, the compliance officerthen determines under what circumstances should trading activity or thepublication of research be allowed in the securities of that particularentity. Such a determination may be governed by policies set by thefinancial institution and/or government regulations as well as otherbusiness considerations. When the compliance officer receives from thefinancial institution employees information regarding entities that thecompliance officer determines should be included in either the financialinstitution's Restricted List or Grey List, the compliance officeroperates CO access device 111 to input this information into listdatabase 103. Before an analyst affiliated with the financialinstitution issues a report regarding an entity, a supervisory analyst(SA) typically checks whether the issuing entity is on either thefinancial institution's Restricted List or Grey list and, if so, whatrestrictions have been placed on publishing research about a particularsecurity issued by the entity. Supervisory Analysts use SA Access Device115 to access the system 101 using any known communication protocol. SAsare given a limited read only access to Restricted List and Grey Listentered by the Compliance Officers. Private Bankers access the system byusing Private Bank Access Device 125 to retrieve a list of securitieswhich are Restricted only to Private Bankers by the Compliance Officers.Some users are given a read only access to the Compliance Officer HomePage. These include people who have the rights to view the non-publicinformation but do not have the rights to make any changes to them. Theyaccess the system using the Read Only Access Device 113. Trader AccessDevice 127 is used by the trader typically to check whether the securityhe wishes to trade on is on the financial institution's Restricted Listand, if so, what restrictions have been placed on trading the particularsecurity. Finally, Administrative Access Device 117 is given to thesystem administrators. This access level gives administrators the rightto add new users to the system, delete deals that are not relevant, sendout Restricted List emails to the concerned persons and makeannouncements to all the compliance officers using the system. Onecompliance officer per region is given administrative access to thesystem.

Referring now to FIG. 2, there is shown a screenshot of an addtransaction screen 201 via which a compliance officer adds generalinformation regarding an entity to be added to list database 103.Initially, the compliance officer selects in a list type field 203 theparticular list—Restricted List, Grey List or Radar List—in which theentity is to be included. The compliance officer then adds additionalinformation regarding the entity and a contemplated transactioninvolving the entity in various fields. For example, the complianceofficer enters the name of the business group of the financialinstitution that is engaged with the entity into a business group field205; the date on which the entity's inclusion in the particular list iseffective in an effective date field 207; the expected date thecontemplated transaction is to take place in a transaction timing field209; a tickler date that will be used by the compliance officers as areminder in a tickler date field 211; the date on which the entity willbe removed from the particular list in a off date field 213 and the nameof the responsible compliance officer in a compliance officer field 215.Next, the compliance officer enters into a transaction type field 217the type of transaction regarding which the financial institution isadvising the entity. Such transaction types may be any type oftransaction in which an entity may be engaged or any type of advisoryservices a financial institution may provide pertaining to the entityincluding, by way of non-limiting example, a merger and acquisition, aninitial public offering and a tender offer. Finally, the complianceofficers enters a code name into a code name field 219, a briefdescription of the contemplated transaction in a transaction descriptionfield 221, tickler comments (as a reminder on the ticker date) in thetickler comments field 223 and comments regarding the transaction in atransaction comments field 223.

Referring now to FIG. 3, there is shown a screenshot of an add issuerdetail screen 301 into which the compliance officer enters detailsregarding entity transactions for entities to be included in theRestricted List. The detailed information entered into screen 301 isprimarily divided into three sections: a sales and trading restrictionssection 335, a research suppressions section 337 and an additionalissuer information section 339. In sales and trading restrictionssection 335, the compliance officer enters information that describesthe extent to which salespeople and traders associated with thefinancial institution are restricted in trading the securities of theparticular entity. For example, the compliance officer enters arestriction code into a restriction code field 303. The restriction codeindicates what activities for each transaction type involving the entityor its securities are permissible and/or prohibited. Transaction typesmay include, by way of non-limiting example, M&A transactions, initialpublic offerings and tender offers. For each transaction type, tradersand salespeople may be allowed/prohibited to engage in certain activitytypes including, by way of non-limiting example, market making activity,principal trading activity, positional trading activity, proprietarytrading activity and client solicitation. For instance, if thetransaction type is M&A (i.e., the financial institution is advising theentity in an M&A transaction), then the trader may be prohibited fromengaging in proprietary trading activity (trading on behalf of thefinancial institution). Similarly, any other transaction types andactivity types may be defined and a restriction code may be designatedto indicate to a trader what activity types are permissible/restrictedfor a given transaction type.

The compliance officer also enters into an applicable class field 305the type of security for which the restriction applies. Finally, thecompliance officer may enter any additional comments regarding therestriction in a restriction comments field 306. The information thecompliance officer enters into sales and trading restrictions section327 are provided to an inquiring trader to guide the trader's tradingactivities, as will be described below.

The compliance officer also enters information into researchsuppressions section 337 for the purpose of restricting the activitiesof research analysts that may be issuing a research report pertaining toan entity on the Restricted List. First, the compliance officer entersinto a forecast field 307 the scope to which the financial institutionanalysts are restricted from issuing a forecast regarding an entity ofthe Restricted List. For example, the compliance officer may select a“Global” restriction that indicates that the analysts are restrictedfrom issuing a forecast regarding the entity anywhere in the world. Incertain cases the compliance officer may only restrict an analyst fromissuing a forecast about a particular entity in the United States orsome other region of the world. In other cases, the compliance officermay not restrict analysts from issuing a forecast altogether. Thecompliance officer also enters into a Rating/Recommendation field 309the scope to which the analysts may issue a rating/recommendationregarding the entity. For example, the compliance officer may restrictthe analysts from issuing a rating recommendation globally, regionallyor not at all. Next, the compliance officer will indicate in a SafeHarbor: Rule 138 field 311 and a Safe Harbor: Rule 139 field 317 whetherthe Rule 138 and/or Rule 139 safe harbors, respectively, apply for theparticular entity. In a Research Text field 315, the compliance officerenters the geographic regions in which the analysts are restricted fromissuing research text.

In addition, the compliance officer enters into a Role field 313 therole the financial institution is playing in the transaction involvingthe particular entity. For example, if the financial institution is aManager/Co-Manager of an initial public offering involving the entity,then the compliance officers enters this information into Role field313. Sensitivity level of the security is set in sensitivity field 318.The compliance officer also enters into an SA comments field 319 inresearch suppressions section 337 any comments appropriate for asupervisory analyst, into CO comments field 321 any comments appropriatefor compliance officers and into Disclaimer Language field 323 anyspecific disclaimer language an analyst must include in a researchreport pertaining to an entity that is in the Restricted List.

Screen 301 also includes an additional user information section 339 thatincludes a local code field 325 for entering the Bloomberg symbol if itis not obtained from the database that contains the security details.Aka field 327 is used to enter aliases to the selected security. Forexample, International Business Machines is also know as IBM,International Busn Machine etc., and these aliases can be entered in akafield 327. This feature is useful as the user can search for a securityusing the alias names. The compliance officer selects either PrivateBank, Asset Management or Private Bank Asset Management if a securityhas to be on the Restricted List for the Private Bankers. It is set toNot Applicable if it does not concern the Private Bankers. Market Makeris set to either Yes or No in the Market Maker field 331 and ResearchCoverage is set to either Yes or No in the Research Coverage field 333.

Referring now to FIG. 4, there is shown a screenshot of an add deal teamdetail screen 401 into which the compliance officer enters detailsregarding the deal team in the financial institution that is advisingthe particular entity regarding a transaction. Screen 401 includesfields to enter pertinent information regarding each member of the teamincluding a role field 403 for enter the deal team member's role, asector/product group field 404 for entering the group to which the teammember belongs, an effective on date field 405 for entering the date theparticular team member joined the team and a comments field 406.

Referring now to FIG. 5, there is shown a screenshot of a Grey Listissuer detail screen 501 into which the compliance officer entersdetails regarding entities to be included in the Grey List. In screen501, the sensitivity level of the security is selected in thesensitivity field 503, the compliance officer enters any commentsregarding the entity that is suitable for a supervisory analyst into aSA comments field 505. “No research allowed-IPO” is an example of an SAcomment entered by the compliance officer that will be used as areference by the supervisory analysts. Any comments regarding the entitythat is suitable for a compliance officer is entered into a CO commentsfield 507, (“Watch research” is an example of the CO comment that may beentered by a Compliance Officer). In addition, a local code is enteredinto a local code field 509, a aka into aka field 511, a market makerinto market maker field 513 and research coverage into research coveragefield 515.

Referring now to FIG. 6, there is shown a screenshot of a searchtransactions screen 601 via which a compliance officer may search listdatabase 103 for entities that match a particular search criteria. Inthe exemplary embodiment depicted in screen 601, a compliance officermay search list database 103 by selecting in a transaction status field603 a transaction status (for e.g., Open, Closed or All), for thepurpose of retrieving from list database 103 those entities that areinvolved in a transaction that meets the selected transaction status.The compliance officer selects in a list type field 605 the type of listthat is to be searched including the Grey List, the Restricted List, theRADAR List or a combination of all of these lists. The complianceofficer also selects the security search criteria by either choosing thesecurity name search, Bloomberg symbol search, cusip code search, isincode search, sedol code search, Reuters code search or the code namesearch in the search criteria field 607 and enters into a security namefield 608 the name of a particular entity to be searched for in listdatabase 103. In an exemplary embodiment, the input into security namefield 608 may be a partial input and the search mechanism used may be afuzzy search or any other search mechanism that provides search resultsbased on a partial input. Reports Section 609 has reports that generateActive Grey Lists, Active Restricted Lists, Active Grey and RestrictedLists, Recent Grey Lists, Recent Restricted Lists and Recent Grey andRestricted Lists. Compliance officers and Supervisory Analysts haveaccess to these reports. Tickler Comments Report is used only by theCompliance Officers. There is a section for Announcements 611 where theadministrator can enter comments that will be viewed by all thecompliance officers.

Referring now to FIG. 7, there is shown a screenshot of a query resultsscreen 701 that is generated by a search request invoked by searchtransactions screen 601. Screen 701 displays various fields ofinformation for each entity that meet the search criteria including aTxn ID field 703 which is a unique identifier for a particular deal, alist field 705 that indicates the list type in which the entity isincluded, an issuer field 707 that is the name of the entity, an akafield 709 that is the alias for the security, a transaction field 711that indicates the transaction type regarding which the financialinstitution is advising the entity, a date on field 713 that is the datethe entity was placed on the particular list (for the given transaction)and a date off field 715 that is the date the entity (for a particulartransaction) is to be removed from the given list. In an exemplaryembodiment, any other suitable information may also be displayed inresults screen 701.

Referring now to FIG. 8, there is shown a screenshot of a general viewscreen 801 that is displayed when an entity listed in results screen 701is selected using the txn Id (for e.g., by clicking on the entity with acomputer mouse). A compliance officer may also accesses general viewscreen 701 by activating a general information link 813. General viewscreen 801 is divided into four sections: a general information section803 that summarizes the information the compliance officer entered viageneral information screen 201, an issuer information section 805 thatsummarizes information regarding a particular security of an entityentered via the issuer information screen 301 and also additionalinformation retrieved from the database that stores the issuer detailslike the cusip, sedol, Bloomberg symbol, isin etc., a researchsuppressions section 807 and a sales & trading restrictions section 809that summarizes information entered via issuer detail screen 301. In anexemplary embodiment, the compliance officer may directly edit anyinformation contained in general view screen 801.

Referring now to FIG. 9, there is shown a screenshot of a transactioncomment screen 901 that includes any comments made regarding aparticular entity for a given transaction. A compliance officer accessestransaction comment screen 901 by activating an additional comment linkin the general information section 803. Transaction comment screen 901includes a comment date section 903 that lists the date, the commentauthor section 905 that lists the name of the author and the contentsection 907 that contains the comment made. A comment field 905 isincluded that displays the text of all the comments made by each authorlisted in comment author section 909. A comment entered into the commentfield 909 can be submitted as either a transaction comment by clickingon submit button 913 or can be submitted as the CFD comment by clickingon the submitcfd button 911. The CFD comment is entered by thecompliance officers regarding the entity that is suitable for theCorporate Finance Department.

Referring now to FIG. 10, there is shown a screenshot of a deal teamscreen 1001 that lists information regarding all the members of a teamthat is involved with advising the entity for the particulartransaction. A compliance officer may accesses deal team screen 1001 byactivating a deal team link 811.

Thus, a compliance officer uses CO access device 111 to interact withsystem 101 for maintaining restricted list file 105, Grey list file 107and deal team file 109 stored in list database 103.

Before a trader affiliated with the financial institution places a tradein a security issued by an entity, either for a financial institutionclient or on behalf of the financial institution itself, the trader istypically required to check whether the issuing entity is on thefinancial institution's Restricted List and, if so, what restrictionshave been placed on trading the particular security. To make such adetermination, the trader operates a trader access device 127 (forexample, a personal computer executing suitable software) thatcommunicates with system 101 using any known communications method andprotocol, such as the Internet. Trader access device interfaces withuser interface 119 for sending to list manager 121 a query from thetrader regarding whether a particular entity is on the Restricted List.List manager 121 retrieves the responsive information from restrictedlist file 105 contained in list database 103 and forwards theinformation to trader access device 127 via user interface 119.

Referring now to FIG. 11, there is shown a screenshot of a trader queryresponse screen 1101 according to an exemplary embodiment that includesat least a portion of the Restricted List that is responsive to atrader's query. Response 1101 includes a new addition section 1103 thatlists entities that have been recently added to the Restricted List. Foreach entity included in new addition section 1103, information isprovided upon which the trader can determine whether a contemplatedtrade is restricted. For example, included is an issuer field 1104 thatlists the name of the particular entity, a plurality of issuer ID numberfields 1105 that include the ID number of the entity security that isrestricted, an RL code field 1106 that indicates the restriction levelset by the compliance officer (in restriction code field 303 of issuerdetail screen 301) for the particular entity, a date field 1107 thatindicates the date the entity was placed on the Restricted List and thedate it is expected that the entity will be removed from the RestrictedList guide (as provided by the compliance office via general informationscreen 201), a location field 1108 that indicates the location withinthe financial institution from which the restriction regarding theentity originated, a transaction type field 1109 that indicates thenature of the relationship between the financial institution and theentity and the type of transaction for which the financial institutionis advising the entity and a comments field 1110 that provides thetrader with any comments regarding the restriction that the complianceofficer has inserted into restriction comments field 306 of issuerdetail screen 301.

Response 1101 also includes a removed section 1111 that provides similarinformation as provided in new additions section 1103 for entities thathave been recently removed to the Restricted List.

Based on the restriction included in RL code field 1106 (as describedabove), the inquiring trader determines whether contemplated transactionis restricted.

Before an analyst affiliated with the financial institution issues areport regarding an entity, a supervisory analyst (SA) typically checkswhether the issuing entity is on either the financial institution'sRestricted List or Grey List and, if so, what restrictions have beenplaced on publishing research about a particular security issued by theentity. To make such a determination, the SA operates an SA accessdevice 115 (for example, a personal computer executing suitablesoftware) that communicates with system 101 using any knowncommunications method and protocol, such as the Internet. SA accessdevice interfaces with user interface 119 for sending to list manager121 a query from the SA regarding whether a particular entity is oneither the Restricted List or Grey List. List manager 121 retrieves theresponsive information from restricted list file 105 and Grey list file107 contained in list database 103 and forwards the information to SAaccess device 115 via user interface 119.

Referring now to FIG. 12, there is shown a screenshot of a supervisoryanalyst home page screen 1201. In the exemplary embodiment depicted inscreen 1201, the supervisory analyst selects in a list type field 1203the type of list that is to be searched including the Grey List, theRestricted List or a combination of all of these lists. The SA alsoselects the security search criteria by either choosing the securityname search, Bloomberg symbol search, cusip code search, isin codesearch, sedol code search, Reuters code search or the code name searchin the search criteria field 1205 and enters into a security name field1207 the name of a particular entity to be searched for in list database103. In an exemplary embodiment the input into security name field 1207may be a partial input and the search mechanism used may be a fuzzysearch or any other search mechanism that provides search results basedon a partial input if the exact match section 1209 is notchecked—otherwise it retrieves the exact search criteria results.Reports Section 609 has reports that generate Active Grey Lists, ActiveRestricted Lists, Active Grey and Restricted Lists, Recent Grey Lists,Recent Restricted Lists and Recent Grey and Restricted Lists. LastUpdate Section 1211 displays the date and time of the latest addition ofGrey or Restricted List made to the system by the Compliance Officer andis used as a reference by the supervisory analysts.

Referring now to FIG. 13, there is shown a screenshot of a supervisoryanalyst query response screen 1301 according to an exemplary embodimentthat includes at least a portion of the Restricted List and Grey Listthat is responsive to an SA's query. Response 1301. For each entityincluded in search results section 1323, information is provided uponwhich the SA can determine whether the publication of a particularresearch report is permissible. For example, included is an issuer field1307 that lists the name of the particular entity, a plurality of issuerID number fields 1309 that include the ID number of the entity securitythat is restricted, a date field 1311 that indicates the date the entitywas placed on the particular list and the date it is expected that theentity will be removed from the list and a location field 1208 thatindicates the location within the financial institution from which theentry regarding the entity originated. Also included is a list field1303, a sensitivity level field 1305, a safe harbor field 1315 thatcorrespond to fields in research suppression section 329 of issuerdetail screen 301 in which the compliance officer indicates under whatcircumstances an analysts report regarding the entity may be published,as described above. In an exemplary embodiment, other fields may beincluded such as a field displaying any comments from the complianceofficer regarding the entity, the names of deal team members who areover the wall as in field 1317 and the transaction type as in field1319. A query section 1321 is included for an easier searchfunctionality for the users.

Referring to FIG. 14, there is shown a screenshot of a private bankquery response screen 1401. In the exemplary embodiment depicted inscreen 1401, the private banker is given access to all the securitiesthat is Restricted for the private bankers by the Compliance Officers.Screen 1401 displays various fields of information for each entityincluding an issuer field and aka field 1403 that is the name of theentity and its alias, a date field 1405 that is the date the entity wasplaced on the particular list (for the given transaction) and the datethe entity (for a particular transaction) is to be removed from thegiven list, the plurality of issuer ID number fields 1407 that includethe ID number of the entity security that is restricted, the countrysection 1409 for that security, the name of the compliance officer whoentered the deal in the section 1411, a transaction field 1413 thatindicates the transaction type regarding which the financial institutionis advising the entity and a Restriction field 1415 that displays therestriction on that security. In an exemplary embodiment, any othersuitable information may also be displayed in results screen 701.

As with a query provided to system 101 by a trader, a query provided byan SA may include all or a part of the name of a particular entity inwhich case Response 1201 will include those entities that match theprovided search phrase. Also, it will be obvious to provide the SA witha mechanism for searching on other fields contained in restricted filelist 105 and Grey list file 107.

Typically, before an employee of a financial institution is allowed totransact in a security in the employee's personal account, the employeeis required to check whether the entity issuing the security is on thefinancial institution's Restricted List. To make such a determination,the employee operates an employee access device (for example, a personalcomputer executing suitable software) that communicates with system 101using any known communications method and protocol, such as theInternet. Employee access device interfaces with user interface 119 forsending to list manager 121 a query from the employee as to whether thecontemplated transaction is prohibited based on the Restricted Listcontained in restricted list file 105. Based on the informationcontained in restricted list file 105, list manager 121 determineswhether the employee transaction is permissible and forwards theresponse to employee access device 117 via user interface 119.

Accordingly, the present invention provides a system and method forimplementing a compliance program in a geographically-dispersedfinancial institution. Because the financial institution's RestrictedList and Grey List are centrally stored in list database 103 andaccessible using any known communications method and protocol, such asthe Internet, any affiliate of the financial institution, such as atrader, SA and employee, may access system 101 in order to determinewhether a contemplated action is allowed based on the contents of theRestricted List and Grey List and the financial institutions complianceprogram. In this way, a compliance officer need not be contacted by arequesting affiliate in order to approve each contemplated transactionthereby significantly increasing the rate at which contemplatedtransactions are approved. Furthermore, because system 101 maystructured to be globally-accessible (for example, if system 101 isconnected to the Internet), information entered into system 101 by afinancial institution's compliance officer located in a first time zonebecomes immediately accessible by affiliates of the financialinstitution located in a second time zone. Thus, contemplated trades orresearch report publications may be approved immediately without havingto directly query a responsible compliance officer that may be difficultto reach.

System 101 also includes an export interface 123 that receives listinformation from list database 103 via list manager 121 for export toexternal systems. In an exemplary embodiment, export interface 123exports to external market data systems the entities included in thefinancial institution's Restricted List so that securities issued bysuch entities that are displayed in such market systems can be labeledas a restricted securities. An example of such an external market datasystem is a Bloomberg system that receives the restricted listinformation from export interface 123 and labels the securities itdisplays as restricted, where appropriate, so that affiliates of thefinancial institution that use the Bloomberg system can see at a glancewhat securities are restricted.

Export interface 123 also exports Restricted List and Grey listinformation to a surveillance systems that is operated by the financialinstitution to determine that trades performed by traders and employeesof the financial institution do not violate the financial institution'scompliance program. Surveillance system monitors trades executed throughthe financial institution's trading systems and determines whether anytrades involves securities of entities that are included in theRestricted List and whether the particular trade was permissible basedon the scope of the restriction associated with such entities. Thesurveillance system also determines whether any trades involvesecurities of entities that are on the Grey List and, if so, is there atrading pattern in such securities that may indicate a violation of thefinancial institution's compliance program. In either case, thesurveillance system may also notify a compliance officer of trades andtrading patterns that may be impermissible and that therefore meritfurther scrutiny.

Referring now to FIG. 15, there is shown a block diagram of a globalcompliance system 1501 according to an exemplary embodiment of thepresent invention. Elements that are similar to elements of system 101of FIG. 1 are identically labeled and a detailed description thereof isomitted.

System 1501 includes an input interface 1509 that receives informationfrom three sources: a positional information source 1503, a transactioninformation source 1505 and a directorship information source 1507.Positional information source 1503 includes the securities in which thefinancial institution maintains a position that is at the financialinstitution's position limit for that security. Typically, positionalinformation is derived from analyzing information from several sourcesincluding, for example, all the financial institution's trading systemsand the financial institution's books and records. Once it is determinedin which securities the financial institution has reached its positionlimits, this information is fed to system 1501 in the form of positionalinformation source 1503. This information is then forwarded by inputinterface 1509 to list manager 121 that determines the entities thatshould be restricted based on the position limits reached by thefinancial institution. List manager 121 then causes such restrictions tobe stored in restricted list file 105 contained in list database 103.

Transaction information source 1505 includes information regarding thetransactions the financial institution's bankers are engaged in. Thisinformation may be derived from systems in that are used by thefinancial institution's bankers to document each ongoing transaction.Based on this information, list manager 121 determines those entitiesthat are included in any of the transactions and that therefore shouldbe included in either the Restricted List or Grey List and under whatcircumstances should trading and research publication be restricted.List manager 121 then causes such restrictions to be stored inrestricted list file 105 contained in list database 103.

Directorship information source 1507 includes information regarding thedirectorships any financial institution affiliates maintain that maygive rise to a trading/publication restriction. Based on thisinformation, list manager 121 determines those entities that for whichan affiliate holds a directorship and that therefore should be includedin either the Restricted List or Grey List and under what circumstancesshould trading and research publication be restricted. List manager 121then causes such restrictions to be stored in restricted list file 105contained in list database 103.

Thus, while in system 101, a compliance officer was responsible forinputting list information into system 101, in system 1501, suchinformation is automatically received from positional information source1503, transaction information source 1505 and directorship informationsource 1507 and stored in list database 103. In addition toautomatically receiving such information, a compliance officer mayoperate CO access device 111 to input additional compliance informationor modify existing compliance information.

Referring now to FIG. 16, there is shown a block diagram of a globalcompliance system 1601 according to another exemplary embodiment of thepresent invention. Elements that are similar to elements of system 1501of FIG. 15 are identically labeled and a detailed description thereof isomitted.

In system 1601, export interface 123 also exports Restricted List andGrey List information to the financial institution's trading system1611. In this embodiment, trading system 1611 monitors the entities thatare contained in the Restricted List and either flag or prevent tradingin securities issued by such entities that violate any restrictionscontained in the list. In addition, system 1601 monitors tradingpatterns in securities included in the Grey List to determine whetherany such patterns is in violation of the financial institution'scompliance program. In either case, trading system 1611 may alert acompliance officer of any such trades or trading patterns for furtherinvestigation.

Accordingly, system 1601 automates the process by which information isreceived for inclusion in either the Restricted List or Grey Listthereby reducing any dependence on compliance officers to gather andinput such information.

Referring now to FIG. 17, there is shown a block diagram of a globalcompliance system 1701 according to yet another exemplary embodiment ofthe present invention. Elements that are similar to elements of system1601 of FIG. 16 are identically labeled and a detailed descriptionthereof is omitted.

In system 1701, input interface 1509 also receives information fromtrading systems 1611 upon which further refinement can be made to theinformation contained in either the Restricted List or Grey List.

Based on the above description, it will be obvious to one of ordinaryskill to implement the system and methods of the present invention inone or more computer programs that are executable on a programmablesystem including at least one programmable processor coupled to receivedata and instructions from, and to transmit data and instructions to, adata storage system, at least one input device, and at least one outputdevice. Each computer program may be implemented in a high-levelprocedural or object-oriented programming language, or in assembly ormachine language if desired; and in any case, the language may be acompiled or interpreted language. Suitable processors include, by way ofexample, both general and special purpose microprocessors. Furthermore,alternate embodiments of the invention that implement the system inhardware, firmware or a combination of both hardware and software, aswell as distributing modules and/or data in a different fashion will beapparent to those skilled in the art and are also within the scope ofthe invention. In addition, it will be obvious to one of ordinary skillto use a conventional database management system such as, by way ofnon-limiting example, Sybase, Oracle and DB2, as a platform forimplementing the present invention.

It will thus be seen that the objects set forth above, among those madeapparent from the preceding description, are efficiently attained and,since certain changes may be made in carrying out the above process, ina described product, and in the construction set forth without departingfrom the spirit and scope of the invention, it is intended that allmatter contained in the above description shown in the accompanyingdrawing shall be interpreted as illustrative and not in a limitingsense.

It is also to be understood that the following claims are intended tocover all of the generic and specific features of the invention hereindescribed, and all statements of the scope of the invention, which, as amatter of language, might be said to fall therebetween.

1.-50. (canceled)
 51. A system for implementing a compliance program ina financial institution, comprising: a list database for storingrestricted list information regarding a plurality of entities andrestrictions imposed on employees of the financial instructions inconducting activities associated with the plurality of entities; a listmanager module, executing on at least one programmable processor,retrieving and delivering at least a portion of the restricted listinformation from the list database to an external computer system;wherein the list manager module receives information from an automatedsource and modifies the restricted list information stored in the listdatabase based upon the information from the source.
 52. The system ofclaim 51, wherein the restricted list information is partitioned into arestricted list and a grey list.
 53. The system of claim 52, wherein thesource is a computer trading system and the information from thecomputer trading system comprises trading patterns in securities of theplurality of entities included in the restricted list information; andthe list manager module modifies the restricted list informationcontained in the restricted list or grey list according to theinformation from the computer trading system.
 54. The system of claim51, wherein the source is a positional information source and theinformation from the positional information source comprises positionalinformation that identifies securities in which the financialinstitution maintains a position and have reached a position limitimposed by the financial institution; and the list manager modulemodifies the restricted list information to include additional entitiesdetermined from the positional information.
 55. The system of claim 51,wherein the source is a transactional information source and theinformation from the transactional information source comprisestransactional information that identifies entities included intransactions handled by the financial institution; and the list managermodule modifies the restricted list information to include additionalentities determined from the transactional information.
 56. The systemof claim 51, wherein the source is a directorship information source andthe information from the directorship information source comprisesdirectorship information that identifies entities in which the financialinstitution or an affiliate of the financial institution holds adirectorship status; and the list manager module modifies the restrictedlist information to include additional entities determined from thedirectorship information.
 57. The system of claim 52, further comprisingan input interface module, executing on the at least one programmableprocessor, that receives and forwards the information from the source tothe list manager module to further refine the restricted listinformation contained in the restricted list or the grey list.
 58. Thesystem of claim 51, wherein the external computer system is a computeraccess device, the list manager module delivering at least a portion ofthe restricted list information from the list database to the computeraccess device in response to a query from the computer access deviceregarding whether a particular entity is included in the restricted listinformation.
 59. The system of claim 51, wherein the external computersystem is a computer surveillance system, the list manager moduledelivering at least a portion of the restricted list information fromthe list database to the computer surveillance system, the restrictedlist information being used by the computer surveillance system tomonitor and issue alerts in response to trades executed through thecomputer trading system in securities of one or more of the plurality ofentities included in the restricted list information.
 60. The system ofclaim 51, wherein the external computer system is the computer tradingsystem executing on at least one programmable processor, the listmanager module delivering at least a portion of the restricted listinformation from the list database to the computer trading system, theinformation being used by the computer trading system to monitor andflag or prevent trading in securities of one or more of the plurality ofentities included in the restricted list information.
 61. A computerprogram product, tangibly embodied in an computer readable storagedevice, for implementing a compliance program in a financialinstitution, including instructions being operable to cause dataprocessing apparatus to: store, in a list database, restricted listinformation regarding a plurality of entities and restrictions imposedon employees of the financial instructions in conducting activitiesassociated with the plurality of entities; retrieve and deliver at leasta portion of the restricted list information from the list database toan external computer system; receive information from an automatedsource and modify the restricted list information stored in the listdatabase based upon the information from the source.
 62. The computerprogram product of claim 61, wherein the restricted list information ispartitioned into a restricted list and a grey list.
 63. The computerprogram product of claim 62, wherein the source is a computer tradingsystem and the information from the computer trading system comprisestrading patterns in securities of the plurality of entities included inthe restricted list information; and the computer program productincluding further instructions to modify the restricted list informationcontained in the restricted list or grey list according to theinformation from the computer trading system.
 64. The computer programproduct of claim 61, wherein the source is a positional informationsource and the information from the positional information sourcecomprises positional information that identifies securities in which thefinancial institution maintains a position and have reached a positionlimit imposed by the financial institution; and the computer programproduct including further instructions to modify the restricted listinformation to include additional entities determined from thepositional information.
 65. The computer program product of claim 61,wherein the source is a transactional information source and theinformation from the transactional information source comprisestransactional information that identifies entities included intransactions handled by the financial institution; and the computerprogram product including further instructions to modify the restrictedlist information to include additional entities determined from thetransactional information.
 66. The computer program product of claim 61,wherein the source is a directorship information source and theinformation from the directorship information source comprisesdirectorship information that identifies entities in which the financialinstitution or an affiliate of the financial institution holds adirectorship status; and the computer program product including furtherinstructions to modify the restricted list information to includeadditional entities determined from the directorship information.
 67. Amethod for implementing a compliance program in a financial institution,comprising the step of, using at least one programmable processor to:store, in a list database, restricted list information regarding aplurality of entities and restrictions imposed on employees of thefinancial instructions in conducting activities associated with theplurality of entities; retrieve and deliver at least a portion of therestricted list information from the list database to an externalcomputer system; receive information from an automated source and modifythe restricted list information stored in the list database based uponthe information from the source.
 68. The method of claim 67, wherein therestricted list information is partitioned into a restricted list and agrey list.
 69. The computer program product of claim 68, wherein thesource is a computer trading system and the information from thecomputer trading system comprises trading patterns in securities of theplurality of entities included in the restricted list information; andthe method further comprising the step of using the at least oneprogrammable processor to modify the restricted list informationcontained in the restricted list or grey list according to theinformation from the computer trading system.
 70. The computer programproduct of claim 67, wherein the source is a positional informationsource and the information from the positional information sourcecomprises positional information that identifies securities in which thefinancial institution maintains a position and have reached a positionlimit imposed by the financial institution; and the method furthercomprising the step of using the at least one programmable processor tomodify the restricted list information to include additional entitiesdetermined from the positional information.